As the world continues to evolve, so do the speed and regularity with which we exchange our money. And in an increasingly digital environment, it’s more important than ever to use diligent methods when securing these transactions. Hiding behind the vast anonymity of the internet has become the advantage criminals leverage today, and the opportunities to commit fraud have grown in parallel. That’s why modern technology continues to be the most important topic in the cybersecurity conversation—its role has become both imperative and inevitable.

Common Fraud to Watch Out For

Before we dive into the technology and methods that protect us, it’s best to understand the kinds of banking fraud we’re up against. While some of these fraud strategies have been around forever, the digital age has only compounded the abilities of these “bad actors.” Below are the common fraud strategies to watch out for:

  • Wire Fraud – Wire fraud is a crime that can utilize several modes of modern world communication—including telephone, fax, email, or even social media. They use these tactics to convince the bank that they’re pulling large sums of money from a reputable source while pretending to be someone they’re not.
  • Credential Stealing – In these scenarios, the criminal uses nefarious tactics to acquire data that uniquely identifies a user. Using the common ploy of “phishing,” the criminal poses as a legitimate business to trick the victim into releasing a powerful, highly confidential piece of information. This could be a social security number, an ID number, or even password reset verification answers.
  • Account Takeover – Referred to commonly as identity theft, an account takeover is an extremely successful extension of credential stealing. With so many businesses using cloud-powered platforms to house their data, it’s easier than ever for one access point to turn into complete control. The more we move to online services, the more at risk we become.
  • Money Laundering – Any money stolen through fraudulent or criminal activities needs to be legitimized, or “cleaned,” through money laundering. This process works by passing the currency through legitimate channels and having it verified by multiple sources. This is commonly done through banks because of their strong capability in sending large sums of money from one account to another.
  • Accounting Fraud – Accounting fraud happens in the world of business lending. Using a phantom business, the criminal will apply for a loan through falsified bank statements—with no intention of paying back the loan. Once they secure the money, they’re able to simply disappear while the bank takes on the loss.

The Technology That Fights Fraud

As fraud becomes more sophisticated, so do the methods we use to defend ourselves against it. Below are the 5 most common banking fraud prevention methods:

Artificial Intelligence

We already mentioned the volume of transfers that banks are verifying on a day-to-day basis, and asking a person to manually legitimize each one would be nearly impossible. Many of these transactions are happening simultaneously, creating an impossible pile of tasks for one individual to work through—while slowing down the rapid pace now expected by customers. Banks are now using AI-based automated systems programmed to track behaviors and recognize fraudulent activity for them.

Biometric Data

When it comes to creating passwords, we can only add so many unique characters. The risk of passwords being surfaced through nefarious channels is becoming more and more common, and your random collection of letters and numbers can only take you so far. Biometric data uses the characteristics of a user that simply cannot be duplicated—the cadence of your voice, the symmetry of your face, and other inimitable qualities. Adding this layer of protection not only makes it harder to fake someone’s identity, but it also introduces an entirely new layer of security that criminals can’t crack as easily as standard passwords.

Consortium Data

The more data we pull when designing fraud detection systems, the better. If that data is coming from a wide range of sources, you’re only adding more complexities to those trying to access your network. When banks work together to share fraud data and threats to their online system, it gives the automated system a much clearer picture of what it’s fighting against. Oftentimes, a fraud perpetrator has a list of victims longer than one, which means a pattern exists across similar targets. Putting all of that information together effectively multiplies the backend security and analysis in a fraud protection system. Consortium data gives you the power of collective intelligence within the same industry, where the data works together to fight fraud.

High Tech Standardization

As a general rule, a holistic view of your systems is always best for understanding exactly what’s happening with your money. Making sure all of your company’s data lives in the same system is your best chance at achieving this view, and pulling as many aspects of your business out of your old, pre-existing system is even better. Many of these “legacy systems” contain big holes in their funnel that fraud perpetrators know how to exploit, with some systems even continuing to use physical ledgers and paper records to bridge gaps. The faster you’re able to consolidate your internal systems into one solution, the easier time you’ll have identifying suspicious behavior.

Machine Learning

Companies are learning the hard way that simple rule-based AI systems are struggling to keep up with the sophisticated fraud landscape. With machine learning, you have a cybersecurity system that learns from past behaviors and updates its rules. Where standard AI still comes with a level of manual oversight, machine learning deploys a self-regulating system that eliminates the time and energy spent constantly updating or changing security parameters. Using deep learning models to detect the subtleties of behavioral analysis, you’ll be able to flag high-risk sessions that are hiding in plain sight.

Governance, Risk, and Compliance (GRC)

The technology we’ve discussed is only as powerful as the programs harnessing it. Using GRC systems not only protects your data, it also provides a set of processes that help businesses achieve objectives, address risk, and act with integrity. It’s these principles working together that allow complete coverage and protection for your data landscape. Each principle supports the other two principles, and all three consider the same information, people, and technologies. For example, a company might be accountable to a new compliance regulation while also considering internal protection (or governance)—and these two pillars together provide coverage against the risk of a data breach.

Access Risk Management (ARM)

As the discipline of managing access risks, ARM contains methods that identify, assess, and prioritize risks from an access provisioning and compliance perspective. With risk taking on many shapes and sizes, the ARM approach helps to vigilantly monitor your data while using preventative measures to manage access across all users and accounts. To put it plainly, it’s extremely difficult to properly identify banking fraud in your network without a thoughtful solution in place. ARM not only allows you to find when something is wrong—it gives you a clear understanding of how, when, and where to deal with a specific breach.

Final Thoughts

Using automated, smart systems to reduce risk and strengthen security eliminates time wasted while improving the diligence of your protection. SailPoint can help you prevent fraud by securing digital identities. Learn more about Access Risk Management.

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